(Editor’s Note: China has long implemented a Hukou system (户籍制度, meaning residence system) where a person is tied to a specific place and his social welfare benefits, including his children’s education, are all tied to that place. People who move to another city cannot enjoy certain public services in that city. Migrant workers are the worst off. They are tied to villages so, even if they live and work in a city, they are not eligible for the city’s benefits and even their children are not allowed to attend the public schools in the city.)

China National Radio reported that the Zhejiang provincial government recently began to reform the province’s Residence system. The administration issued an implementation plan to promote the integration of migrant workers into urban life. It calls for removal of the hukou restrictions throughout the entire province except for in the province’s capital city of Hangzhou. The move aims to attract more qualified labor to the province. This could be seen as Zhejiang’s efforts to mitigate the shortage of young labor in China as the country’s population ages.

The article said that the initiative is expected to have a positive impact on Zhejiang’s economic growth, population structure, urbanization level, and equality of public services, providing valuable experience that can be replicated across the country.

Source: China National Radio, July 19, 2023
https://zj.cnr.cn/zjyw/20230719/t20230719_526334886.shtml

Guangming Daily website, a major Chinese Communist Party mouthpiece, recently published a theoretical article suggesting that Beijing re-orient its economy stimulus policies around consumer spending rather than investment. The article stated that, to stimulate consumer spending, the focus should be on delivering money to residents through reasonable, legal, compliant, and economically-sound channels. Macro-economic policies need new measures and targets, shifting the focus from investment to consumption, addressing current economic bottlenecks and weaknesses more directly.

The article suggested that reforming the residence identification system (户籍制度) can have an immediate and substantial impact on consumption. (Editor’s notes: The reform here refers to giving people more freedom to move between cities and also letting migrant workers (peasants) enjoy the same benefits given to city dwellers.) According to the article, studies show that migrant workers’ consumption is suppressed by 23 percent due to limited access to public services and social security given the migrants’ lack of urban household registration. Reforms that alleviate this suppression could raise consumption by almost 30 percent even without considering income growth.

The article also suggested improvement of the social security system, as China has a rapidly aging population. Between 2022 and 2035, the ratio in China of elderly to working-age population will grow significantly, increasing the pressure on pension funds and eldercare services. The author argued that a substantial expenditure in the area of social security would serve as a short-term economic stimulus.

Source: Guangming Daily, July 17, 2023
https://theory.gmw.cn/2023-07/17/content_36700264.htm